What can business learn from charities about purpose?
The pandemic has accelerated the importance of “purpose” for business.
As purpose becomes mainstream, businesses need to decide how best to embed it.
Businesses that are serious about purpose can learn from charities about how to put their values at the heart of their organisation.
The “mainstreaming of purpose” is an opportunity and a threat for business
If you think about every advert you saw during the pandemic, it was either a tribute to staff, or a description of the contribution a business was making to society, or an acknowledgement of the contribution of others.
Businesses acknowledged their place in society, their contribution and their interdependence. This “mainstreaming” of purpose, which was already visible before the crisis, will last long beyond it. Trends that started with social enterprises and the B Corp movement are becoming the norm.
We recently wrote that people are thinking more and more about how to live a meaningful life. “Doing good” is less about donating money or time to charities and more about building ethical considerations into spending behaviours and even career choices. People are integrating these ideas into their everyday decisions. They will expect businesses to do the same.
All companies are expected to have perspectives – and take action – on a broad portfolio of issues like climate, diversity and inclusion, global affairs, mental health, privacy and local communities. This goes beyond mere accountability. Businesses are increasingly taking the lead in addressing these issues.
It is an opportunity and a threat at the same time. The pandemic has shown what impact companies are capable of having, but it has also shown the negative backlash companies face if they don’t take this seriously.
To embed purpose, businesses need to think in a holistic way
Embedding purpose goes beyond a series of CSR activities - it is about a deeper mission. How does a company make a positive contribution to the world around it?
Companies have a wide range of stakeholders that they need to consider, satisfy and inspire. Employees, customers, suppliers, communities and shareholders should all understand and profit from the value that is delivered by becoming more purposeful. With the mainstreaming of purpose, all these stakeholders will start demanding a serious effort.
Embedding purpose in an organisation in a meaningful, effective way is hard work. Tweeting a hashtag is easy. Testing every product, process and policy of a company against a set of values is difficult.
One challenge is that branding yourself as “ethical” or “purposeful” as a business means you will be held to higher standards. A commitment to embedding purpose raises expectations. People - be they customers, employees or partners - want to know that the claims you are making are authentic. If they didn’t care, they would’ve gone to someone else.
If you don’t fully commit, people are quick to point out your flaws or accuse you of “woke washing”. The risk of a PR crisis is always looming. Even worse, your actions might harm those you were trying to help.
Want to learn about purpose? Look to charities
There is a type of organisation that thinks about purpose every single day, and these are charities. Their purpose is the reason they exist. So as organisations, charities are engines for achieving social progress – but how do they do it? From our work with the best charities small and large, we identify four lessons:
Know what you want to change and how you’re going to do it: charities think about how they want to change the world around them. Most do so by formulating their Theory of Change: a method to define the social change they want to see, the factors influencing this desired outcome and how the organisation’s activities will affect these factors. This ensures that everything they do is serving this outcome.
Hold yourself accountable to achieving impact: charities also need to make this tangible - they want to know whether they have achieved what they set out to do. Therefore, charities need to be evidence-based. They are serious about defining their purpose, but also about knowing how they measure impact. This helps them make decisions about their activities and holds them accountable to donors and beneficiaries.
Engage with communities and focus on all stakeholders: the best charities are the ones that are in close touch with their community. They engage in conversations about the needs of the diverse groups of people they work with and work for. Treating the work as a conversation helps them pick up on changes and make sure they stay relevant and impactful. In the end, it is not about what the charity thinks is right - it is down to whether people see improvements in their lives.
Realise you can do more together: charities work with partners to achieve what they set out to do. In doing so, they want to be a wider platform for change. It’s about the cause, not about “winning” from similar charities. As a business, you have a unique platform – you can influence your customers, employees, suppliers and even your competitors to make better choices. But you are unlikely to have all the expertise you need to turn these assets into impact. Seek out those who can help.
For many companies, the world looks very different from how it was half a year ago. Instead of rushing to go back to normal, this time presents a window of opportunity for businesses to think about what difference their organisation can really make. When people talk about “building back better”, this is what they mean.